Archive for February, 2013

We all know Japanese people prefer new stuff — new homes, new rice, new prime ministers every 12 months — which may explain why the used clothing business isn’t as big here as it is in other countries. According to the Asahi Shimbun, 50 percent of discarded used clothing in America is recycled, either commercially or as contributions, and the portion in South Korea is 80 percent. In Japan, it’s only 20 percent, meaning that the rest is simply trashed. But that may change with the advent of a new model for used clothing stores.

Don Don’s website

Don Don Up Co. Ltd., headquarted in Morioka, Iwate Prefecture, opened its first used clothing store, called Don Don Down on Wednesday, in Hachinohe, Aomori Prefecture, eight years ago. The company now commands a chain of 60 outlets nationwide, with more to come. Don Don, an onomatopoeic word expressing a process of steady progression, came up with an ingenious pricing system that not only saves the company overhead and personnel costs, but draws customers on a weekly basis by turning shopping into a “game,” as its promotional literature puts it.

All the merchandise is affixed with price tags, but the tags don’t display yen amounts. Instead they have pictures of fruits and vegetables, 10 in all. The pictures represent prices, which range from a high of ¥5,250 (i.e., ¥5,000 for the item plus 5 percent consumption tax) to a low of ¥105. These prices are listed on charts alongside their corresponding symbols and posted throughout the store. The price tag on a particular item never changes as long as it remains in the store.

The charts are changed weekly. For instance, this week, perhaps, all the strawberry items cost ¥5,250, but next week, all the remaining strawberry items will be priced at ¥4,200. Each week, the line of a particular fruit or vegetable goes down one pricing rank until it reaches ¥105. The following week all the items previously priced at ¥105 are removed from stock and exported to Southeast Asia in bulk, which means no item stays in the store for more than ten weeks. The weekly price changes take effect on Wednesdays, thus explaining the name of the store. Not surprisingly, that’s the day they do their biggest business.

This system adds a touch of drama to the shopping experience. If a customer likes a particular item she can buy it right away or take a chance and wait til the following week when it’s cheaper, but then she risks the possibility that someone else will buy it. The president of the company told Asahi, “I want our customers to enjoy shopping as if playing a game. I wanted to change the image of the used clothing store, which tends to be dark.”

At first, the scheme was to try to replace the inventory as often as possible to keep people coming, but that meant changing price tags on a continuing basis to weed out unpopular items. It wasn’t until management hit on the fixed price tag system that they figured a way to not only streamline operations but make the process interesting for consumers.

As for procuring merchandise, Don Don’s method is similar to Book Off’s, Japan’s pioneer in used merchandise, which boasts 900 outlets. It bases the price it pays for a book on its condition and then places a seal on each volume that indicates how long is has been in the store. Every book that remains on the shelf for three months automatically gets reduced to ¥105.

When those don’t sell, they’re pulped. With the exception of some brand items, Don Don buys clothing from anyone by the kilogram: ¥500 for “very popular” items, ¥50 for “popular” items, and ¥10 for “useful” items. And they pay 50 percent more on Mondays and Thursdays. More significantly, they refuse very little that is wearable, since they can always sell it, again by the kilogram, to wholesalers in Southeast Asia. Just like produce.

The whole point of a consumption tax is that everyone, rich and poor alike, bears it equally according to ability, though in truth the poor bear more since a greater portion of their spending is for necessities. The government understands this even if it isn’t admitting as much. News reports are saying that the ruling coalition of the Liberal Democratic Party and the Komeito have decided to discuss whether or not certain items, such as food, will be subject to either smaller or no increases in the consumption tax by the time it is set to be raised to 10 percent in 2015, though they aren’t guaranteeing any exceptions. In any case, the initial increase to 8 percent that takes effect next year will proceed without any exceptions.

Nevertheless, the LDP thinks it has to throw taxpayers a bone of some sort, which is one of the explanations being given for the inheritance tax exemption that goes into effect in April for three years. It’s generally believed that Japan’s tax on legacies is punishingly high, though in fact only 4 percent of heirs ever pay it. If it seems high it’s probably because people who live in Tokyo, where the media is concentrated, tend to pay the lion’s share of inheritance taxes owing to much higher property values, but even in the capital only 9 percent of heirs ever pay inheritance tax.

However, families of means or those with property are worried since the government has announced that its goal is to raise the national portion of inheritance tax payers to 6 percent. In addition, the income tax burden for the highest tax bracket may be increased from 40 to 45 percent. Older people with money are said to be rushing to public lectures by investment experts to find out how they can pass on more of their assets to their children and grandchildren.

So the government came up with this exemption, which is exclusively used for education. Grandparents can give up to ¥15 million to each grandchild to pay for education-related expenses without the recipient having to pay a gift tax. In order to claim the exemption, the grandparent must deposit the money in an account that has been opened expressly for this purpose in a trust bank. The grandchild or parent/guardian can then withdraw the funds whenever they are needed for educational purposes, but in order to do so they must submit a receipt before withdrawal showing how the money is being used.

A recent feature in the Tokyo Shimbun looked into a conundrum that few people know about. Fifty-two years after his death, Ernest Hemingway remains one of the most popular novelists on the planet. Translated into dozens of languages, his books continue to sell well. Whether those works are now in the public domain depends on each individual country’s copyright laws. In Japan, the copyright for written works is protected for 50 years after an author’s death, but if you look at Hemingway’s individual novels there’s something strange. “The Old Man and the Sea,” which was published in 1952, is now a public domain work in Japan, but “For Whom the Bell Tolls,” published in 1940, is not, and it won’t be until 2022.

Get thee to a library: Cover of Japanese translation of “For Whom the Bell Tolls”

The reason for this discrepancy is a term included in the San Francisco Peace Treaty that officially ended the Pacific War when it was signed in 1951. This term in Japanese is called senji kasan, which in the body of the treaty is explained as a “wartime add-on to the protection period” of a particular work’s copyright. In other words, during the war, Japanese users of copyrighted works from the 15 countries aligned with the Allied cause did not pay fees and royalties to those copyright holders, so the period of that non-payment, from the declaration of war in 1941 to the signing of the San Francisco treaty, was added on to the regular copyright protection period in order to collect fees “retroactively.” Moreover, this add-on period was calculated in days, since each of the fifteen countries concluded the treaty at different times. For instance, Lebanon didn’t sign until Jan. 17, 1954, which means the add-on was 4,413 days.

What’s unique about senji kasan is that it only applies to Japan. The other two Axis powers, Germany and Italy, were not obligated to implement the add-on. Actually, Italy was supposed to have been obligated, albeit for only five years, but the country’s government negotiated with each of the Allied countries and eventually had the protection extension cancelled in 1993 when the European Union was being formed. France also had a similar extension condition domestically, since for much of the war it was occupied by the Nazis, but it expired a long time ago. According to Tokyo Shimbun, copyright experts tend to agree that the SF treaty extension is discriminatory and is merely a lingering remnant of the Allies’ will to punish Japan. But the war ended in 1945. Isn’t it about time the extension was rescinded?

As it turns out, the problem is not really the countries who benefit from this extension. According to one expert interviewed in the article, the problem is that the Japanese government “accepted the extension as punishment, a term of surrender,” and thus feels an obligation to pay, even now. None of the Japanese administrations that have been in power for the past 50 years even bothered to address the issue. It is simply a matter of laziness. If Japan wanted to get rid of the extension it would be relatively easy but time-consuming, since it would entail negotiations with each of the fifteen countries that signed the treaty. Some have said that the controversial Trans-Pacific Partnership talks provides a perfect venue for discussing the matter.

It wasn’t long ago that the law was a lonely profession in Japan, though the number of attorneys may have only seemed small in comparison with the United States, where litigation is practically a spectator sport. Apparently, that’s no longer the case, according to a recent article in Tokyo Shimbun, which says that there is a glut of lawyers in the major cities. Consequently, many are branching out to smaller cities and even the countryside to find clients. The article profiles one young attorney who opened an office in Tokyo two years ago and has had scant business ever since, so in the past year he has held seven free sodankai (consulting sessions) in Hokkaido — six in Sapporo and one in Obihiro. The Hokkaido Bar Association says that such sessions are a burgeoning trend that started three years ago.

According to a government white paper on the legal profession, there are now 15,000 lawyers practicing in Tokyo, a 70 percent increase over the last ten years. And if you include the surrounding prefectures of Kanagawa, Saitama and Chiba, the number practicing in the Tokyo Metropolitan Area tops 32,000, which is more than half of all the lawyers in Japan.

An earlier white paper released in 2008 charts the steady rise of legal professionals in Japan. From 1989 to 1995, the ranks of attorneys added only about 200 new people a year, and after 1995 the number increased gradually until 2001, when the number leaped to 1,117. In 2008, more than 4,000 passed their examinations to become lawyers. Around the turn of the century, the business world demanded more legal experts, saying that trials, especially civil court cases involving commercial matters, took too long. As a result, more law schools were set up, but the demand never materialized on the scale predicted. Between 2000 and 2008, the number of civil suits handled by district courts in Japan increased by only 0.5 percent, though the overall number of lawyers went up by 62 percent. As a result, the number of cases handled per attorney dropped by 21.7 percent, though the attendant loss of income wasn’t quite as steep. The average yearly pay for a lawyer in 2004 was ¥16.5 million and in 2008 was slightly less than ¥16 million.

The profession received a much needed boost in 2006 when the Consumer Credit Law was revised with regard to “gray area” rates (kinri) and consumer credit companies were forced to refund ¥1.6 trillion in overcharged interest. About 70 percent of the customers eligible for the refunds hired lawyers and notaries to the tune of ¥40 billion, and somewhere between 20 and 30 percent of all the lawyers in Japan have so far benefited from this windfall.

Since most of the nation’s lawyers are in Tokyo or Osaka and the consumer loan-related bankruptcy business in those areas has dried up, they are looking farther afield. One Tokyo law office, Adire, which advertises extensively on television, has already set up offices in Sapporo, Hakodate, Obihiro and Kushiro. Most law offices looking to expand in this way hire advertising agencies, which research regional municipalities and set up the consulting sessions that alert locals to the availability of legal services. A president of one ad agency told Tokyo Shimbun that big city lawyers sometimes have an edge over locals in smaller towns, because people don’t know them. It’s sometimes difficult for locally based attorneys to get business, especially with regard to bankruptcies, because potential clients are also neighbors who would prefer that the community not know anything about certain aspects of their business.

But of course, local lawyers resent these city slickers invading their bailiwicks. A representative of a consumer protection committee in Sapporo told Tokyo Shimbun that since there are no regulations limiting where a lawyer can practice, most stay in Tokyo and do their distant business online or by phone, which means they can’t always help clients in emergencies. Conversely, some of the city lawyers say they are suddenly faced with much bigger travel costs, but assume that increased revenues will justify the added expense, thus implying that until a lawyer shows up in your town you probably never thought you needed one.

Edit!: Guideline for widow exemption from English language Income Tax Guide for 2009

Last fall a single mother living in Osaka started a petition to get the city government to reduce the fees she paid for daycare. Her argument is based on the widow’s exemption (kafu kojo), which is granted to certain people on their income tax returns. Though many single parents qualify for the exemption, this woman does not. The exemption only applies to women whose husbands are dead (or missing) or who are divorced, regardless of whether or not they have children.

According to an article in Tokyo Shimbun, the petitioner was engaged to get married, but during her fifth month of pregnancy her fiancee got cold feet and left her. It was too late to get an abortion, so she quit her job in Tokyo and moved back to her parents’ home in Osaka. Three months after giving birth she started working part-time, and later secured full-time regular employment. Consequently, her income increased, and thus she had to pay more for daycare since the center where her child was enrolled determines fees based on income.

In Japan “income” (shotoku) is considered to be the amount of money on one’s tax return after all exemptions and deductible expenses are subtracted. Because this woman is not a widow or a divorcee, but rather a single mother who has never been married, she doesn’t qualify for the exemption, which is either ¥350,000 or ¥270,000, depending on circumstances. And since she can’t take the exemption, her income is higher, and thus she pays more for daycare.

The Japan Federation of Bar Associations agrees with the woman, but actually goes further by saying that the law itself is unfair since it discriminates against certain types of single parents. As the name of the exemption attests, it was not originally enacted for the benefit of single mothers but rather for widows. The law went into effect in 1951 to help thousands of women whose husbands were killed in the war. Since then the law has been revised several times. It was expanded to include divorced women with children, and then divorced women without children (but who weren’t getting alimony).